Commercial Credit Research Articles

The Effects of Listed Company Charitable Foundation on Business Relationship of Supply Chain: Based on the Empirical Research of Corporate Social Responsibility

<p class="MsoNormal" style="text-align: justify;">The Public Welfare Foundation of a listed company is a non-profit organization with independent legal personality. It is established and funded by a listed company. The purpose of establishing a foundation for a listed company is generally to carry out charitable activities and make important contributions to charitable causes. However, due to the special power separation model, the autonomy of the foundation is poor, and there may be serious agency conflicts, ultimately leading to listed companies becoming beneficiaries of the foundation's charitable activities. We have found from the perspectives of commercial credit, sales, and cooperative relationships that social responsibility initiating organizations (listed companies) can obtain potential benefits from social responsibility fulfilling organizations (listed company public welfare foundations) in supply chain commercial relationships, that is, listed companies that establish public welfare foundations have good supply chain commercial relationships. When a listed company and a public welfare foundation have a close relationship in terms of fund donation, decision-making, business, and naming, the public welfare foundation has a strategic preference in selecting project names, project service areas, project beneficiaries, and project service areas. It prioritizes the interests of the listed company, enabling the listed company to obtain better supply chain business relationships.</p>

Trade Acceptances, Financial Reform, and the Culture of Commercial Credit in the United States, 1915–1920

This article examines the nationwide campaign by financial reformers in the 1910s to convince businesses across the United States to abandon established commercial credit practices and use trade acceptances—the quintessential “real bill”—in their stead. The creation of the Federal Reserve System (Fed) and the outbreak of World War I offered a powerful coalition of campaigners the opportunity to forcefully argue that by capitalizing open account credit, trade acceptances fostered good business practices and stabilized the banking and financial systems. These campaigners relied on trade associations to disseminate, and the federal government to legitimize, their message. While some firms obliged, many businesses and banks criticized the campaigners’ arguments, casting trade acceptances as a means of financial centralization and as being contrary to the American culture of credit. Trade acceptances did not supplant promissory notes or trade in the open market and were rarely used by banks to access Fed liquidity. Instead, their legacy lies in their adoption by finance companies in the hope of securing financing for the distribution and mass consumption of consumer durables.

Establishing yourself with faith: Confucian culture and corporate commercial credit

Establishing yourself with faith: Confucian culture and corporate commercial credit

Financial technology and commercial credit redistribution

Whether financial technology can restrain the redistribution of commercial credit is of far-reaching significance for preventing financial risks of enterprises. Based on this, this paper uses the data of China's Shanghai and Shenzhen A-share listed companies from 2012 to 2021 to investigate the impact of financial technology on commercial credit reallocation. The results show that the development of financial technology can significantly weaken the redistribution of commercial credit, which is still valid after a series of robustness tests. Further analysis shows that the role of financial technology is more obvious in areas with weaker financial development, state-owned enterprises and large-scale enterprises. The mechanism test shows that the development of financial technology can alleviate the financing obstacles faced by enterprises in direct financing, enhance the allocation efficiency of credit resources, and thus inhibit the redistribution of commercial credit. This paper not only provides solutions for micro-subjects to improve financing channels, but also provides theoretical support for understanding and proposing the development of financial technology under the new normal to some extent.

Corporate Commercial Credit Resistance Currency Research on the Function of Policy Shock

Corporate Commercial Credit Resistance Currency Research on the Function of Policy Shock

Can Joining the Agricultural Industry Chain Alleviate the Problem of Credit Rationing for Farmers?

To solve the problem of credit rationing for farmers that shackles the transformation and upgrading of the agricultural industry and to improve the effect of agricultural industry chains in helping farmers, this paper empirically examines the effect of joining agricultural industry chains on supply-based and demand-based credit rationing for farmers, using the probit and tobit models based on the microscopic research data of 991 farmers in Shaanxi Province, China, and explores its specific effect mechanism. The study finds that agricultural industry chains can increase farmers’ credit by reducing the information asymmetry between farmers and banks, reducing agricultural business risks, and forming effective collateral and guarantee mechanisms, and that they have significant mitigating effects on farmers’ supply-based quantity rationing and demand-based price rationing, risk rationing and transaction cost rationing. Credit enhancement mechanisms such as information systems, commercial credit, orders, guarantees, production services and government support in agricultural industry chains have significant effects on alleviating farmers’ credit rationing, while insurance has limited effects on alleviating farmers’ credit rationing. There are differences in the effects of agricultural industry chains on alleviating various types of credit rationing of heterogeneous farmers in terms of scale, and the effects of joining agricultural industry chains on alleviating supply-based and demand-based credit rationing of large-scale farmers are more obvious than those of small farmers. Compared with the existing studies, this paper incorporates the credit rationing produced from farmers’ own reasons into the analysis framework, and introduces credit-enhancing variables of agricultural industry chains to test their specific mechanisms on farmers’ credit rationing. The findings of this study can provide a theoretical basis for promoting the innovation of financial models of agricultural industry chains, which is of great practical significance for improving the system of agricultural industry chains in developing countries, strengthening the role of industrial chains in absorbing small farmers, and promoting the modernization of agricultural industries with financial assistance.

Does the history of opening ports and trading influence the long-term business credit environment of cities? Evidence from the Yangtze River Delta region of China.

Based on the China City Commercial Credit Environment Index (CEI), a more scientific spatial DID model was used to examine the long-term impact of the opening of ports and trading in the late Qing Dynasty on the urban commercial credit environment, taking cities above the prefecture level in the Yangtze River Delta as a sample. The study confirms that: (1) the opening of ports and commerce in the late Qing Dynasty had a significant contribution to the urban commercial credit environment, which was conducive to the transformation of production methods and interpersonal relationships from traditional to modern, and to the improvement of the urban commercial credit environment. (2) Before the signing of the Treaty of Shimonoseki, the local forces of the late Qing Dynasty were resistant to the economic aggression of the Great Powers, and the positive impact of the opening of ports and trading on the commercial credit environment of port cities was more significant, but the impact was not obvious after the signing of the Treaty of Shimonoseki. (3) From the history of the opening of ports for trade in the late Qing Dynasty, the economic aggression of the Western powers against the non-patronage areas by means of the buying class objectively strengthened the concept of rule of law and credit awareness in the local market and exerted a long-term influence on the commercial credit environment of the cities, but the impact of the opening of ports for trade on the commercial credit environment of the patronage areas was not prominent. (4) Cities located in the sphere of influence of the common law powers had a more pronounced impact on the commercial credit environment as their institutions and concepts were more easily transplanted, while the impact of the opening of ports and trading on the commercial credit environment of cities in the sphere of influence of the civil law powers was not significant. Policy Insights: (1) Enhance the ability to negotiate with foreign countries on economic and trade matters from a level-headed world perspective, and be bold and adept at fighting unreasonable rules, standards and requirements in order to better optimise the business credit environment; (2) Regulate the use of administrative resources and avoid undue administrative intervention, which is an important prerequisite for improving the basic system of the market economy to enhance the business credit environment; (3) Emphasise both connotative development to follow a Chinese style modernisation path, and (3) emphasising selective cooperation to promote outward development, promoting the interaction, convergence and matching of domestic and foreign regulations, and continuously improving the regional commercial credit environment.

On the fast track: the benefits of ESG performance on the commercial credit financing.

Under the sustainability strategy, a company's ability to enhance its financing capacity through improvements in environmental, social, and governance (ESG) performance is crucial for fostering high-quality development. This study empirically examines the impact of corporate ESG performance on commercial credit financing (CCF) using data from China's A-share listed companies between 2009 and 2021. The findings of the panel regression analysis revealed a significant positive correlation between a company's ESG performance and CCF. Further analysis of the influencing mechanisms indicates that a company's ESG performance can increase its likelihood of obtaining CCF by reducing environmental, social, and governance risks. Specifically, we found that ESG performance facilitates access to CCF by promoting green innovation, enhancing social reputation, and mitigating operational risk. This study expands and enriches the theory of informal financing of enterprises while incorporating the more comprehensive assessment criteria for sustainable development.

Corporate ESG Performance and Financing Constraints: Empirical Evidence from Chinese Listed Companies

Abstract In recent years, corporate ESG performance has received extensive attention from academic and practical circles around the world. This paper examines the impact of corporate ESG performance on financing constraints based on data from 2012-2019 Chinese A-share listed companies. The findings show that corporate ESG performance can mitigate corporate financing constraints. The results remain robust after using the new Environmental Protection Law, a quasi-natural experiment, with the difference-in-difference model to mitigate endogeneity. The mechanism test shows that ESG performance can mitigate corporate financing constraints by attracting more analyst attention to mitigate information asymmetry and obtaining more commercial credit. Heterogeneity analysis shows that corporate ESG performance has a more pronounced effect on alleviating financing constraints for non-state and high-tech firms. Keywords: ESG, Financing constraints, Analyst attention, Commercial credit.

Financial outcomes after pediatric critical illness among commercially insured families

Critical illness results in subjective financial distress for families, but little is known about objective caregiver finances after a child’s pediatric intensive care unit (PICU) hospitalization. Using statewide commercial insurance claims linked to cross-sectional commercial credit data, we identified caregivers of children with PICU hospitalizations in January–June 2020 and January–June 2021. Credit data included delinquent debt, debt in collections (medical and non-medical), low credit score (< 660), and a composite of any debt or poor credit and were measured in January 2021 for all caregivers. For the 2020 cohort (“post-PICU”), credit outcomes in January 2021 were measured at least 6 months following PICU hospitalization and reflect financial status after the hospitalization. For the 2021 cohort (comparison), financial outcomes were measured prior to their child’s PICU hospitalization and therefore reflect pre-hospitalization financial status. We identified 2032 caregivers, 1017 post-PICU caregivers and 1015 comparison cohort caregivers, of which 1016 and 1014 were matched to credit data, respectively. Post-PICU caregivers had higher adjusted odds of having any delinquent debt [aOR 1.25; 95%CI 1.02–1.53; p = 0.03] and having a low credit score [aOR 1.29; 95%CI 1.06–1.58; p = 0.01]. However, there was no difference in the amount of delinquent debt or debt in collections among those with nonzero debt. Overall, 39.5% and 36.5% of post-PICU and comparator caregivers, respectively, had delinquent debt, debt in collections or poor credit. Many caregivers of critically ill children have financial debt or poor credit during hospitalization and post-discharge. However, caregivers may be at higher risk for poor financial status following their child’s critical illness.

A recent review on optimisation methods applied to credit scoring models

PurposeThis paper aims to present a literature review of the most recent optimisation methods applied to Credit Scoring Models (CSMs).Design/methodology/approachThe research methodology employed technical procedures based on bibliographic and exploratory analyses. A traditional investigation was carried out using the Scopus, ScienceDirect and Web of Science databases. The papers selection and classification took place in three steps considering only studies in English language and published in electronic journals (from 2008 to 2022). The investigation led up to the selection of 46 publications (10 presenting literature reviews and 36 proposing CSMs).FindingsThe findings showed that CSMs are usually formulated using Financial Analysis, Machine Learning, Statistical Techniques, Operational Research and Data Mining Algorithms. The main databases used by the researchers were banks and the University of California, Irvine. The analyses identified 48 methods used by CSMs, the main ones being: Logistic Regression (13%), Naive Bayes (10%) and Artificial Neural Networks (7%). The authors conclude that advances in credit score studies will require new hybrid approaches capable of integrating Big Data and Deep Learning algorithms into CSMs. These algorithms should have practical issues considered consider practical issues for improving the level of adaptation and performance demanded for the CSMs.Practical implicationsThe results of this study might provide considerable practical implications for the application of CSMs. As it was aimed to demonstrate the application of optimisation methods, it is highly considerable that legal and ethical issues should be better adapted to CSMs. It is also suggested improvement of studies focused on micro and small companies for sales in instalment plans and commercial credit through the improvement or new CSMs.Originality/valueThe economic reality surrounding credit granting has made risk management a complex decision-making issue increasingly supported by CSMs. Therefore, this paper satisfies an important gap in the literature to present an analysis of recent advances in optimisation methods applied to CSMs. The main contribution of this paper consists of presenting the evolution of the state of the art and future trends in studies aimed at proposing better CSMs.

Economic Policy Uncertainty and Enterprise Financing Efficiency: Evidence from China

This study investigates the effect of economic policy uncertainty on financing efficiency in China’s high-tech manufacturing industry from static and dynamic perspectives. Using data envelopment analysis (DEA) and the Malmquist index, we measure financing efficiency and its changes over time. The results show that China’s high-tech manufacturing firms exhibit low static financing efficiency, yet they exhibit relatively high dynamic efficiency. A significant positive relationship is found between economic policy uncertainty and both static and dynamic financing efficiency. The uncertainty motivates firms to improve their financing efficiency, mainly by enhancing technical and scale efficiency and by increasing comprehensive efficiency. Moreover, different financing channels, such as commercial credit, equity financing, bank credit, and internal financing, have varied effects on the relationship between economic policy uncertainty and static financing efficiency. This study demonstrates that high-tech manufacturing enterprises can respond to economic policy uncertainty by improving their financing efficiency.

Commercial Credit, Financial Constraints, and Firm’s R&amp;D Investment: Evidence from China

Commercial Credit, Financial Constraints, and Firm’s R&amp;D Investment: Evidence from China

Research on the Influence of High-Tech Enterprise Strategy on Commercial Credit Financing

Scientific and technological innovation has become an important strategic resource for the development of national economy. Due to the knowledge-intensive and technology-intensive characteristics of high-tech industries, the traditional pledge financing means are not suitable for such enterprises, and the commercial credit financing based on delayed payment has become an important means of short-term financing. Strategic management has always been a hot topic in the field of enterprise operation and management accounting, and the strategic decision-making of enterprises on financing will be reflected in the financial behavior of enterprises. Therefore, this paper takes China's A-share high-tech listed companies from 2004 to 2020 as samples, introduces A comprehensive index system of strategic aggressiveness, explores the impact path of strategic deviance on corporate commercial credit financing, and evaluates the moderating effect of market position on the relationship between the two. The results show that high-tech enterprise strategy can significantly affect the enterprise's commercial credit financing, with the increase of strategy aggressiveness, the enterprise's commercial credit financing ability will decline; This effect will be weakened for companies with high market position. Finally, this paper summarizes the research conclusions and puts forward suggestions from three perspectives, which has reference value for understanding the economic consequences of enterprises' strategic decisions, improving commercial credit financing strategies and determining enterprises' strategic transformation and development, and provides strategic decision-making suggestions for high-tech enterprises' short-term financing.

Financing decision of heavy pollution enterprises under green credit policy: Based on the perspective of signal transmission and supply chain transmission

More and more countries have successively promulgated various environmental policies to mitigate climate change and environmental pollution. These policies have become important in promoting low-carbon development and green transformation through enterprise financing. This study employs a difference-in-difference (DID) model to examine how a green credit policy affects the financing choices of highly polluting businesses using the data of A-share listed corporations from 2009 to 2021. The research finds that: (1) The number of bank loans has significantly decreased for highly polluting companies; a green credit policy will also reduce the scale of any non-bank loans. (2) The extent of equity financing and bond financing of highly polluting firms on the capital market decreased due to market constraints and the function of policy signaling. (3) The impact of a green credit policy will spread to upstream and downstream enterprises through trade credit, thus reducing enterprises’ commercial credit scale. (4) The impact of a green credit policy on bank loans is more significant in state-owned enterprises, in regions with a high degree of marketization, and in regions with low intensity environmental regulation. The research results provide targeted policy recommendations for promoting the development of green credit and achieving carbon neutralization.

Supply chain concentration and enterprise financialization: Evidence from listed companies in China's manufacturing industry.

Enterprise financialization will block the equipment update and technological innovation of enterprises by crowding out the main business funds. The risks and benefits of supply chain concentration will affect the enterprise financialization. This paper selects the panel data of A-share listed companies in China from 2009 to 2021, and uses fixed effect regression to analyze the impact of supply chain concentration on enterprise financialization. The conclusions show: both suppliers and customers concentration significantly promote the financialization of enterprises, and this conclusion is still valid after a series of tests; This kind of financialization effect is heterogeneous in four aspects: the nature of property rights, the scale of enterprises, the intensity of industrial competition and the level of economic development in the region where the enterprises are located; the mechanism analysis show that customer concentration can affect enterprise financialization through upstream commercial credit, but supplier concentration cannot affect enterprise financialization through downstream commercial credit.

Analysis of Socio-Economic Conditions for the Formation of the Innovative Potential of the Region (Kaluga Region)

The study focuses on the current state of the region’s economy, determining the role of its innovative potential in ensuring a high level of sustainability and competitiveness. The article provides a systematic analysis of the main factors shaping the innovation potential of the Kaluga region, justifies limiting trends, including: uncertainty in the economic situation, investment risks, a high percentage of commercial credit and a lack of own financial resources. This paper evaluates the system-forming sectors and industries, the level of investment activity and substantiates their impact on increasing the innovation potential of the Kaluga region. The study reveals the mechanism of providing resources for innovation activities based on the program-targeted approach of the implemented state programs “Innovative development and modernization of the economy”, “Development of entrepreneurship and innovation in the Kaluga region”, contributing to the output, increasing attractiveness for investors, allowing to ensure high values of socio-economic development in the ranking among the regions of the Russian Federation. Based on the component approach, a rating assessment was carried out that characterizes the effectiveness of the implementation of the innovative potential of the Kaluga region. The rating is based on a system of indicators of socio-economic conditions of innovation activity, scientific and technical potential, the level of innovation and export activity, the quality of regional innovation policy.

Carbon Costs and Credit Risk in a Resource-Based Economy: Carbon Cost Impact on the Z-Score of Canadian TSX 260 Companies

Climate risks and climate risk-related policies on carbon threaten the ability of economies to thrive and will impact the credit risk of many sectors, primarily high-emitting sectors. Higher credit risks will also affect lenders if their credit portfolios are exposed to climate change risks. The introduction of carbon pricing policies will exacerbate this threat in resource-based economies such as Canada. While some research exists on climate exposure and risks to lending portfolios, there is a knowledge gap on how carbon pricing impacts individual commercial credit risk. Consequently, this study analyzes the effect of different carbon pricing scenarios on Altman&amp;rsquo;s z-score. Using the Canadian TSX 260 data between 2010 and 2020 as a sample, this paper applied the costs of different carbon prices using the Canadian Government&amp;rsquo;s carbon price regime of $0 to $170 to analyze Altman&amp;rsquo;s z-score variables until 2030. The results suggest that carbon price will significantly impact the credit risk of companies in high-emitting industries, such as the energy sector. We conclude that climate policy exposure in the form of carbon costs will have a real impact on credit risk and that lenders must consider carbon emissions as part of their credit risk assessment.

Business credit network characteristics and impact on green economy efficiency: Evidence from the Greater Bay Area around Hangzhou Bay of China.

In regions where the development of formal finance is relatively lagging behind, commercial credit has partially replaced the role of formal finance and facilitated the development of the private economy and even the country, thus making commercial credit an important entry point for understanding and promoting sustainable economic development. Taking the Hangzhou Bay Greater Bay Area as a case study, based on the City Business Credit Environment Index (CEI) from 2015 to 2019, we examine the characteristics of business credit networks using social network analysis and discuss the impact of business credit on urban green economy efficiency heterogeneity by drawing on spatial econometrics. The study confirms that the structure of business credit networks in the Hangzhou Bay Greater Bay Area tends to be dense, the network density and number of connections show growth, the spatial network structure is taking shape, and the strength of spatial connections among cities has increased. Hangzhou, Shaoxing, Jiaxing and Shanghai are at the centre of the network and play a radiation-driven role. The business credit network in the Hangzhou Bay Greater Bay Area is characterised by self-stability and has evolved from a multi-centre to a single centre. Business credit is negatively correlated with the efficiency of the green economy in the Hangzhou Bay Area, which is a departure from the Chinese "financial development paradox". In terms of heterogeneity, the relationship remains consistent for port cities and open coastal cities in general, while the effect is less pronounced for cities above sub-provincial level. The study concludes that, with the high-quality economic development of the Hangzhou Bay Greater Bay Area, the Chinese "financial development paradox" does not exist in the region at this stage, which also highlights the need to accelerate the construction of a Chinese-style modernisation theory and practice system.

The Impact of Internal Control Defects on Enterprises’ Commercial Credit Financing

Internal control indicates the quality of a firm’s financial information, and thus influences the trust relationship between the firm and its trading partner. This paper based on the previous analysis assumes that internal control quality would affect trade credit financing got from trading partner. Based on the sample of listed companies in the scope of implementation of internal control system from 2014 to 2017, this paper uses multiple regression model. This study reveals that there is a significant negative correlation between material weaknesses of internal control and the trade credit financing, which supports our hypothesis that a firm gets less trade credit financing when material weaknesses are found in its internal control system.